{"id":464,"date":"2025-09-09T11:27:28","date_gmt":"2025-09-09T11:27:28","guid":{"rendered":"https:\/\/mhkhn.com\/mortgage\/?page_id=464"},"modified":"2025-09-17T07:49:02","modified_gmt":"2025-09-17T07:49:02","slug":"low-down-payment-purchase-options","status":"publish","type":"page","link":"https:\/\/mhkhn.com\/mortgage\/low-down-payment-purchase-options\/","title":{"rendered":"Low Down Payment Purchase Options"},"content":{"rendered":"

Not ready for a sizable down payment? There are options that can make you a home owner with a low down payment.<\/strong><\/p>\n

Deciding on how much money to use as a down payment can be confusing. The Mortgage Experts is here to help. The route for each buyer or investor depends on their situation and personal preferences.<\/p>\n

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Low Down Payment Options<\/h2>\n

FHA Loan<\/h4>\n

You can purchase a single-family home or condominium with as little as 3.5% down payment using an FHA loan, but there is a price for lower down payments on conforming loans: mortgage insurance (often called PMI, private mortgage insurance).<\/p>\n

Mortgage insurance is required when the conforming loan amount is MORE than 80% of the purchase price (practical translation: down payment is less than 20%). Also, the lower the down payment, the higher the premium ratio charged.<\/p>\n

USDA Loan<\/h4>\n

Is your dream home surrounded by pasture and farmland? Buyers in rural and suburban markets may be able to use a USDA loan, which requires no money down.<\/p>\n

Household income limitations do apply and buyers should expect to pay PMI if their down payment is less than 20%.<\/p>\n

VA Loan<\/h4>\n

Military veterans who qualify for a VA loan can purchase a home with no money down. VA loans can provide up to 100% financing for qualified military personnel and veterans.<\/p>\n

There are also non-conforming mortgage loan programs available that allow for 80\/20 set-ups, which allow borrowers to obtain a second mortgage to cover the 20% down payment.<\/p>\n

Have less than perfect income and credit? We may have a program that fits your needs!<\/p>\n

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How much should I use for a down payment?<\/h3>\n

\t\tThere are costs and benefits to any option, including those with low down payments. You should carefully consider your options and discuss your plan with a professional.
\nTalk to one of our loan specialists today to come up with a customized solution that best fits your needs and budget.\t\t\t<\/p>\n

Cost of a Lower Down Payment<\/h3>\n

\t\tLow or no down payment programs have two primary costs that result in a higher monthly payment:\t\t\t\t\t<\/p>\n

    \n
  • \n\t\t\t\t\t\t\t<\/path><\/svg>
    \n\t\t\t\t\t\t\t\t\t\tHigher interest rates\n\t\t\t\t\t\t\t\t\t<\/li>\n
  • \n\t\t\t\t\t\t\t<\/path><\/svg>
    \n\t\t\t\t\t\t\t\t\t\tHigher mortgage insurance premiums.\n\t\t\t\t\t\t\t\t\t<\/li>\n<\/ul>\n

    \t\t\t\tMortgage insurance can be removed once sufficient equity is produced. For example, if the property shows at least 20% equity in a few years, the mortgage insurance can be refinanced away.\t\t\t<\/p>\n

    Benefits of Lower Down Payments<\/h3>\n

    Though the disadvantages of low down payments seem serious, there are also advantages. Take time to weigh the two and assess which is the best for you.<\/p>\n

    The chief benefits of lower down payment include the following:<\/p>\n

      \n
    • \n\t\t\t\t\t\t\t<\/path><\/svg>
      \n\t\t\t\t\t\t\t\t\t\tLess money out of pocket at the time of purchase.\n\t\t\t\t\t\t\t\t\t<\/li>\n
    • \n\t\t\t\t\t\t\t<\/path><\/svg>
      \n\t\t\t\t\t\t\t\t\t\tHigher rate of return. Your property\u2019s appreciation will be the same whether you put 3%, 5%, or 20% down. In fact, your rate of return actually decreases as you make a larger down payment, as discussed below.\n\t\t\t\t\t\t\t\t\t<\/li>\n
    • \n\t\t\t\t\t\t\t<\/path><\/svg>
      \n\t\t\t\t\t\t\t\t\t\tOpportunity cost. In some cases, the smart investor can make more money from available cash by placing it in other investments.\n\t\t\t\t\t\t\t\t\t<\/li>\n
    • \n\t\t\t\t\t\t\t<\/path><\/svg>
      \n\t\t\t\t\t\t\t\t\t\tOpportunity cost. In some cases, the smart investor can make more money from available cash by placing it in other investments.\n\t\t\t\t\t\t\t\t\t<\/li>\n<\/ul>\n

      \t\t\t\tDuring the first few years of the mortgage loan, the bulk of your monthly payments go towards paying interest \u2013 which is usually tax-deductible. So you get quite a bit of your monthly payments back at the end of the year in the form of tax deductions.\t\t\t<\/p>\n

      Personal Consideration<\/h3>\n

      Carefully consider the amount of money that you want to put down. Your lender will qualify you for a certain level based on your income; however, that amount may be different from the level that you feel comfortable paying each month. You must decide what you can afford.<\/p>\n

      Talk to your loan officer at The Mortgage Experts about the best situation for you.<\/p>\n

      Learning Center<\/h2>\n

      Learn everything you need to know about buying a home.<\/p>\n

      \/\/ building overview<\/h2>\n

      Get in touch with our
      \nexpert agents<\/h2>\n

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